When you port your mortgage, you simply take it with you from a home you’re selling to the new home you’re buying. The transfer can be very simple, as the terms and interest rate will stay the same (thus the point of porting your mortgage.) But just what’s involved in the porting process? You’ll need to know that before you decide to go ahead with it.
With Toronto mortgages, you’ll first need to know whether you’re paying a fixed rate, or a variable rate. And if you’re paying a variable rate, you’ll most likely need to speak to your lender, and possibly ask them to consider your extenuating circumstances; only fixed rates are usually portable.
The next step is to try and move into your new home at the same time you’re moving out of your old home. Doing so isn’t always possible and for homeowners that can’t do it and need bridge financing for their new property, porting a mortgage may also mean a port-increase, where the amount of the mortgage is increased. Sometimes homeowners find that they need to take this option because they won’t have the down payment for the new home until the old one closes. Also if you don’t move into your new home at the same time you leave the old one, your lender may also apply prepayment penalties, even though you’ll still technically have the same mortgage that you had before.
Once you move, or just before, you’ll need to receive an application to port your mortgage from your lender. Even the application can be somewhat confusing, as you’ll most likely need to know specific details about your current mortgage. If you need help filling yours out, ask your lender or your mortgage broker to help you, as they are extremely familiar with these applications and can easily help you with yours.
Once your application is all filled out, you’ll then need to submit it. Remember that porting a mortgage is not an automatic thing and just because you want to, doesn’t mean you always can. If your application to port your mortgage is denied, you will need to apply for an entirely new mortgage.
While porting a mortgage lost popularity for several years, with the historically low interest rates sitting where they are, they’re now making a comeback and are more popular than ever!